...honestly, I still believe that you should be refunded the cost of the puppy to put towards his HUGE medical bills. $1000 is a great help towards that bill.
From the health guarantee "IF" you were to return the pup to the breeder, she would have to pay over and above that $1000 to save his life

So I am so blown away at the fact that she wouldn't refund you so that you can help save his life and continue to provide a wonderful forever home. This is really a very unfair situation....
EVERYDAY I see here on YT a New Pup with LS and/or MVD and it's heartbreaking for both that dog and their owners, and I know first hand as I am one of them too!
LS and MVD pups don't get 'cured' over night, even with Joey's surgery, he is going to have to have on going medical care and special home care for the rest of his life. It takes a special, consistent and precise person and route to care for these dogs all in the 'hope' that they can survive this genetic disease and 'hopefully' live a long life.
....prayers for Joey...